Designing Transfer Pricing Policy
Strategic Transfer Pricing Policy Design
A well-designed transfer pricing policy aligns intercompany pricing with the functional profile of group entities while ensuring regulatory compliance.
We analyse business operations, assess the FAR (Functions, Assets & Risks) profile of transacting parties and design appropriate pricing frameworks supported by benchmarking analysis.
Business & Transaction Analysis
• Review of overall business model
• Identification of intercompany transactions
• Functional interviews with key personnel
• Mapping of functions, assets and risks (FAR analysis)
Pricing Method & Policy Framework
• Selection of appropriate transfer pricing method
• Tested party determination
• Profit Level Indicator (PLI) selection
• Margin or pricing mechanism design
• Policy documentation framework
Implementation & Monitoring
• Drafting internal TP policy manual
• Integration with accounting & ERP processes
• Ongoing review for regulatory updates
• Alignment with documentation requirements (Local File / Master File)
Policy Supported by Benchmarking
Where required, we undertake benchmarking analysis to support the proposed pricing structure.
Our policy recommendations are supported by arm’s length data to ensure defensibility during audits and regulatory review.
Our Policy Design Process
Understanding Operations
We analyse the business model and intercompany arrangements to understand economic substance.
FAR Profiling
We document the functions performed, assets employed and risks assumed by each transacting entity.
Policy Structuring
We design the pricing mechanism and determine appropriate margins or return models.
Documentation & Implementation
We prepare a formal transfer pricing policy document and assist in implementation.
